North Texas economy lifted by Barnett Shale gas

By Anna Driver

FORT WORTH, April 4 (Reuters) - The United States is on the brink of recession, but bonus money, tax receipts and royalties flowing from a shale formation holding a massive amount of natural gas are boosting bank balances across North Texas.

Energy companies are lavishing exploration dollars on landowners, neighborhoods, cities and towns located in the 5,000 square-mile Barnett Shale, where drilling rigs and production equipment are a common sight.

"We're doing a million-dollar remodel of our building right now," said Dan Hendrix, sales manager at the Don Davis Ford Lincoln Mercury car dealership in Arlington, Texas. "I don't see a recession, and I know the economy here is not as bad as it is in other places."

In 2007, the Barnett Shale is estimated to have added more than $8 billion and about 80,000 jobs to the local economy, up from $5.2 billion and more than 55,000 jobs the year before, according to Ray Perryman, an economist hired by the Fort Worth Chamber of Commerce. Oil companies are drilling the Shale in 18 Texas counties, including Tarrant, where Fort Worth is located.

Perryman characterized the benefits from the Barnett Shale as "an economic bonanza," and estimates spending related to natural gas exploration and production now account for about 8 percent of the local economy, up from "almost nothing" in 2001.

"HELPS ME"

Residents and governments benefit by leasing their mineral rights to energy companies; they receive a share of any production profits. The signing of a lease is typically accompanied by a signing bonus, and some have topped $20,000 per acre in the Fort Worth area.

"The Barnett drilling helps the economy and it helps me," said Virgil Fraley, a retiree who is expecting a $22,000 bonus for leasing mineral rights in his neighborhood in Arlington, Texas.

Fraley and his son Gary were attending the second Barnett Shale Expo in Forth Worth last month.

The expo -- sponsored by local businesses and U.S. energy companies that drill in the area including Devon Energy Corp (DVN.N), Chesapeake Energy Corp (CHK.N) and EnCana Corp (ECA.TO) -- was aimed at answering landowners' questions about leasing mineral rights and other drilling issues.

This year, attendance was estimated at 6,000, up from about 5,000 last year.

"We don't see a lot of homes for sale in our neighborhood," Gary Fraley said. "People want to hang on to them to sell the mineral rights."

Trade-offs for landowners who lease their mineral rights include heavy truck traffic, noise from 24-hour operations, possible property damage and pollution.

A projection by the Powell Barnett Shale newsletter shows a well under a 25 percent royalty agreement may bring in more than $2,000 after taxes during the first year of production, with gas sold at $6.00 per thousand cubic feet.

Even so, there are reports of people receiving royalty payments as small as $25 to $50 per month.

"I live on Social Security, so it might give me something to do a little extra," said Vema Hensarling, a resident of Fort Worth who attended the expo.

Her neighborhood located in the northwestern part of the city is about to sign a contract leasing residents' mineral rights, Hensarling said.

The Barnett Shale is not only putting extra dollars in landowners' pockets, but it creates jobs for banks, lawyers, lighting companies, fence makers and lease brokers.

"There are lots of opportunities for a person wanting to do business within the Barnett Shale," said Jay Ewing, who works in operations for Devon Energy in the Barnett Shale. "I get calls every day from people saying 'I want to go to work; when can I start?'"

According to data from the U.S. Census Bureau released last month, the Dallas-Fort Worth area logged the fastest population growth rate of any metropolitan area between 2006 and 2007.

And the Barnett boom is expected to have legs.

Ewing has worked in the Barnett Shale for 25 years. He started with Mitchell Energy, which drilled its first well there in 1981.

If gas prices were to stay high, he said, drilling should last another five years, while production could run for another 50 years.

"To be honest with you, I've been through some of the ups and downs, and this up has gone longer than I thought it would go," Ewing said. (Editing by Gerald E. McCormick)